Monday, August 3, 2009

Get your magnifying glass - there really is an uptick in residential construction spending

“The huge drag from residential construction will probably go away in the third quarter and that’ll provide a general lift to the economy,” said Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts.

So what is making Mr. Bethune say that? Is residential construction spending really stabilizing? Below is a chart of private (excluding government spending) construction spending on signle family homes. It's an amazing chart showing residential construction spending cliff that started in early 06. And if you look really really hard, there in the red circle, you will see an uptick. Mr. Bethune must have a great deal of confidence to project stabilization from this type of data.

Nevertherless if Mr. Bethune is right, this could be a milestone in terms of recovery and jobs. It could be the Wheaton demographic effects kicking in, as construction firms project increased demand for housing. It also could be a temporary blip.